Contents
The background to the negotiations
2
Political developments
Economic reforms
4
The new trade provisions
5
Geographical enlargement
Amendments and modifications
6
Democracy and development
The Joint Assembly
6
Trade
Strengthening competitiveness
7
The comparative advantages
Private sector
8
Commodities
Protocols
Stabex
9
Decentralized cooperation
10
Eighth EDF
10
Objectives of cooperation and programming
Structural adjustment
Debt
The background to the negotiations
Lome IV
Revised
Changes and Challenges
1995 - 2000
Unlike earlier Conventions each of which covered a five-year period, the fourth Lome Convention, signed on 15 December 1989, was concluded for a period of ten years{l). Only the financial protocol attached to the Convention was limited to an initial five-year phase and subject to renewal at the end of that time.
Lome IV's negotiators did, however, provide for a mid-term review - not to be confused with full-blown renegotiation - to allow for adjust-ments or additions to the text of the Convention.
Since the signing of Lome IV, major political and economic changes have taken place both at international level and in terms of the deve-lopment of the ACP States and the Community.
These include the fall of the Berlin wall, the end of East-West rivalry, a certain disenchant-ment with developdisenchant-ment aid because of its poor results and the recession in the VVest, the globalization of international relations and the liberalization of world trade. Hence the Lome partners chose not to confine themselves to renewing the financial protocol as laid down in the Convention but to use the opportunity of the mid-term review to make some amend-ments. This involved revamping the existing text in the light of the economic, political and geopolitical upheavals of recent years.
The Community and the ACP States notified one another on 28 February 1994 of their requests for amendments to the Convention.
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The signing of Lome IV (2nd Protocol) in Mauritius.
Negotiations began in Swaziland on 20 May 1994 and ended on 30 June 1995 at the ACP-EU ministerial meeting held in Brussels follow-ing the Cannes European Council of
26
and27
june(2J.The results were formalized in the agreement signed in Mauritius on 4 November 1995.
(1) It came into force on1March 1990.
(2) For the record, starting from an initial text of 369 articles, 71 articles were amended, deleted or added.
political developments
In November 1989, a month before the signing of Lome IV, the Berlin wall came down. The end of East-West confrontation was to upset the political and geostrategic balance. In the eyes of politicians, development aid for Africa lost one of its main justifications as a lever in the cold war.
Now that there was no longer an ideological basis to the ACP States' political ties to the two superpowers, they lost their geostrategic interest. But during the same period Africa was also caught up in the climate of change, which prompted the La Baule Conference and the emergence of democracy as one of the conditions of development aid. A growing number of countries embarked on a process of democratization. Between 1990 and 1995 about thirty elections were held on the African continent.
These institutional developments went hand in hand with the major economic reform programmes initiated in the I980s under the heading of "structural adjustment". Structural adjustment has severe social repercussions and involves state withdrawal from the production and trade sectors.
One of the main objectives of Lome
is
to modernize industry and increase exportation.c
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The Manantali project in Mali, one of the many infrastructure schemes cofinanced b)! the r.,1JF under Lome.
The Lome IV mid-term review provided an opportunity for the EU to step up its support for this dual process of political and economic reform.
The Maastricht Treaty on European Union was signed in 1992. It contains a new section on development cooperation with specific objectives assigned to the Community to support the development of the countries concerned. In addition, the Maastricht Treaty opens the way for increased coordination and complementarity between the development policies of the Community and the Member States, and greater consistency between the objectives of development cooperation and other common policies, in particular trade and agriculture.
Economic reforms
complying with the new conditions regarding democratic rule. Since the start of Lome IV, the Commission, in cooperation with the IMF and the World Bank, has been involved in formulating adjustment programmes. This allows it to ensure that its priorities are taken into account - namely that the effects of adjustment on the most vulnerable social groups are not too harsh, thus giving reform processes more chance of succeeding. This has met with some success: instead of the virtually standard programmes previously developed by the World Bank and the IMF, adjustment programmes are tailored more closely to the specific capacities and constraints of each country.EU support for the African countries of the franc zone, organized in conjunction with the other donors following devaluation of the CFA franc in January 1994, provided a good example of the type of measures geared to the particular situation of specific countries.
TOTAL NETRESOURCE FLOWS TO SUB-SAHARAN AFRICA
US$ billion
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In 1989, in the face of serious economic and financial difficulties, many ACP States had embarked on the draconian reforms imposed by the IMF and the World Bimk. But although there were signs of recovery south of the Sahara, particularly in Southern and West Africa, the economic crisis continued to hinder the development efforts of many African countries in the first half of the 1990s.
The chapter on financial and technical support for structural adjustment policy was one of the main innovations of the original provisions of Lome IV. The European Community's objective is to support the continuation of structural reforms while ensuring that the social repercussions are tolerable believing as it does that social development is an integral part of economic progress and the promotion of civil society and democracy in Africa.
Generally speaking, efforts to improve management by privatizing bankrupt public sector undertakings are vitally necessary but expensive and politically sensitive. The ACP governments have been forced to administer painful medicine, but at the same time have been concerned to avoid social unrest, while
TOTALNET RESOURCE FLOWS TO AFRICA
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The mid-term review thus set in motion a process which in the long term is aimed at promoting the integration of the ACP economies into the world economy.
On this basis, negotiations became much more wide-ranging and focused on means of stren-gthening trade development in the ACP countries and helping them become more competitive.
with the dismantling of protective systems, competitiveness is going to be a key to econo-mic relations.
A modern sugar refineryin ,Swaziland. Industrializa-tion of the ACP countring intmdtlces problems of competitivit)' with EurojJe and the rest of the world.
Banana cultivation, in Madagascar, an important export industry for many ACP countries.
The position of the ACP States has, however, evolved and relies less and less on what they once regarded as their "acquired rights". They began to acknowledge that in an increasingly free-trade oriented international environment, The ACP States were, however, also concerned about the risk of erosion of their preferences as a result of world trade liberalization following the conclusion in April 1994 of the Uruguay Round and the inauguration on 1 January 1995 of the World Trade Organi-sation. Their fears were compounded by the realization that the United States intended to apply the new rules of international trade indiscriminately. Although the Lome Convention enjoys an exemption allowing tariff preferences to be maintained until 29 February 2000, the US has already objected to the vVTO about the preferential access system that the EU grants to ACP banana producers. The ACP States reaffirmed the great impor-tance that they attach to the trade section of the Convention. The tough negotiations on this point reflected the interests at stake in ACP-EU trade.
Geographical enlargement
The ACP States have been joined by Namibia and Eritrea, bringing their number to70.
TANZANIA
TOGO
TONGA
TRINIDAD AND TOBAGO
TUVALU UGANDA WESTERN SAMOA VANUATU lA'iRE ZAMBIE ZIMBABWE
• The European Union Member States AUSTRIA BELGIUM DENMARK FINLAND FRANCE GERMANY GREECE IRELAND ITALY LUXEMBOURG NETHERLANDS PORTUGAL SPAIN SWEDEN UNITED KINGDOM PAPOUA NEW GUINEA RWANDA
ST KIDS AND NEVIS
ST LUCIA
ST VINCENT AND TK E
GRENADINES
SAO TOME&PRINCIPE
SENEGAL
SEYCHELLES
SI ERRA LEONE SOLO MON ISLAN os
SOMALIA
SUDAN
SURINAME
SWAZILAND
institutions, can playa decisive role in opening up new prospects for regional development in southern Africa as a whole.
The interest shown by South Africa in the Lome Convention proves yet again its attraction as an institution of North-South cooperation. South Africa had observer status at the signing of the Agreement amending the Convention in Mauritius, with the prospect of partial accession to the Convention coupled ,vith a bilateral trade agreement with the Community. Negotiations duly began on the very day that the mid-term review negotiations were concluded. HAITI JAMAICA KENYA KIRIBATI LESOTHO LIBERIA MADAGASCAR MALAWI MALI MAURITANIA MAURITIUS MOZAMBIQUE NAMIBIA NIGER NIGERIA COTE D'lvOIRE DJIBOUTI DOMINICA
DOMIN ICAN R EPUB L1C
EQUATORIAL Gu INEA ERITREA ETHIOPIA FIJI GABON GAMBIA GHANA GRENADA GUINEA GUINEA BISSAU GUYANA
Since the signing of Lome IV the number of Member States in the European Union has increased from 12 to lEi with the accession of Austria, Sweden and Finland in January 199s. These countries signed the Agreement amen-ding the Convention and the new financial protocol, thus enabling them to participate in the 8th EDF.
Lastly, the advent of the new, democratic South Africa freed from the shackles of apartheid marked a major turning point. South Africa, with its impressive new political and economic
III
ACP StatesANGOLA
ANTIGUA AND BARBUDA
BAHAMAS BARBADOS BELIZE BENIN BOTSWANA BURKINA FASO BURUNDI CAMEROON CAPE VERDE
CENTRAL AFRICAN REPUBLIC
CHAD COMOROS
Amendments and modifications
Democracy and development
The mid-term review of the Lome Convention reaffirmed the political content of cooperation.
Lome IV made the defence of human rights an objective but did not provide the practical means of implementing the policy. The revised version fills this gap.
Beside the existing reference to respect for human rights, Article 5 of the revised Conven-tion recognizes the applicaConven-tion of democratic principles and the consolidation of the rule of law as "essential elements".
In order to promote these values, to which the negotiators wanted to add good governance, the EU decidedto step up its support for the ACP States' democratization efforts. ECU 80 million was set aside to support institutional and administrative reform measures. This pro-vision thus affords a direct and specific basis for operations such as support for elections in the ACP States, which in the past were covered by a variety of financial instruments.
Conversely, if these essential principles are violated, procedures exist which in extreme cases may result in the partial or total suspen-sion of the Convention's application (the Article 366a suspension clause). Except for the "emergency cases" defined in a separate declaration, the suspension decision can be taken only after preliminary consultations with the ACP partners and the party in question, which must not exceed 30 days.
In fact, this provision merely institutionalizes and reinforces a practice already followed since the beginning of the 1990s whereby cooperation with certain ACP States has sometimes been suspended because of civil war or serious human rights violations.
It was a sign of the times that in 1995 a major change took place in the spirit and tenor of the discussions. A few years earlier, it was virtually out of the question to venture into the sensitive area of the political aspect of ACP-EU relations. Hence any debate on human rights, democracy or the possible suspension of cooperation was very difficult as the ACP States insisted that the fundamental right was
survival. Yet when it came to the mid-term review of Lome IV, most of the discussions on these issues were concluded without confrontation.
In addition, the revised Convention strengt-hens ACP-EU political dialogue by extending it to foreign policy and security issues, matters of general interest or questions common to a group of countries. This dialogue is not limited to the ACP-EC Council of Ministers. It can also be held within a regional geographical framework or between partners more specifically concerned with a given topic.
The Joint Assembly
Trade
strengthening competitiveness
Negotiations on trade were marked by an entirely new approach. For the first time since Lome I, the main focus of the debate \vas not on preferential access, previously seen as the main way of ensuring trade flows from ACP States.
The commercial advantages enjoyed by the ACP States - compared with the less compre-hensive system of generalized preferences granted to other developing countries - were not enough to offset the competitive gap between ACP producers and their competitors in Asia and Latin America. These preferences, moreover, were now threatened by the liberalization of international trade.
The revised Lome IV accordingly gives greater priority to developing ACP trade to improve competitiveness, encouraging economic growth and the gradual and smooth integration of the ACP States into the world economy. The new approach, which will rely on the allocation of sufficient resources, is retlected in several innovations and in amendments to existing articles of the Convention.
The new Article 15a states that the top priority no longer lies in developing preferential treatment but in improving the competitive-ness of the ACP States. Preferential treatment now features as only one of the means of developing trade.
The Community and ACP States undertake to allocate, under the 8th EDF regional and national indicative programmes, appropriate resources for trade development programmes. All programmes and EDF projects will be evaluated taking into account their effect on the development of this sector and their capacity to contribute to improving the competitiveness of the ACP economies.
The aim is to increase not only ACP-EU trade but to develop all the ACP States' markets: domestic, regional, intra-ACP and internatio-nal. Once again, the objective is to encourage the ACP countries' smooth and progressive integration into the world economy in the
me-dium and long term. The regional dimension, in particular, would provide a worthv,hile framework for attaining this objective.
The comparative advantages
The consensus on the new approach did not prevent preferential treatment and rules of origin being discussed at the insistence of the ACP States.
The Community emphasized how little impact tariff concessions had on the development of ACP-EU trade. However, it acknowledged the need to give a positive signal to the ACP States, which were anxious to reassert their special relationship with the EU in the new situation created by the Uruguay Round. At the mid-term review preferential treatment was exten-ded, with some very rare exceptions, to cover all products originating in the ACP States. Negotiations were tricky, because Southern Europe's farmers feared competition from certain ACP fruits, citrus fruits and vegetables. Under the new provisions there is a general reduction of 16% in the customs duties and levies applied to products which previously enjoyed no preference. Only three particularly sensitive products are excluded: olives and olive-based products, wine and lemons. Con-cessions have also been granted for products subject to quotas, "reference quantities" have been eliminated for all products except oranges and mandarins, and tariff quotas now apply throughout the year.
The ACP countries also requested more liberal rules of origin. Here the revised Lome IV breaks new ground, allowing "cumulation for the first time between the ACP States and neighbouring developing countries belonging to a coherent geographical entity". In the interests of stimulating the growth of regional markets, 15% of the content of an ACP product may be sourced from a neighbouring country while continuing to qualifY for the ACP preference").
coope-LomeTV became the first ACP-EC agreement to include a section on debt which states that special loans will increasingly be replaced by grant aid. At the mid-term review, a furt?er m,yor step was taken with a formal declaratIOn bv the Community undertaking to transform
i~to
grants all uncommitted special loan appropriations outstan-ding from previous Conventions - about ECU 135 million.The way ahead· prospects and Challenges
Each Lome Convention has always drawn and built on the achievements of its predecessors. Lome remains, twenty years after its creation, the only practical example of real North-South partnership and the mid-term review showed the partners' attachment to this collective cooperation between industrialized develo-ping countries, the main features of which are dialogue, security and predictability.
The review provided an opportunity to enrich the Convention and improve the effectiveness of aid. It also showed the need to begin in-depth discussions as soon as possible on the future of relations after 2000, when the Conven-tion expires. The Convention states that formal negotiations on the follow-up to the revised fourth Lome Convention should begin eighteen months before that deadline, i.e. in September 1998. Although it is not possible at this stage to predict the general outcome of the preparatory discussions, it is
A logging plant in Pajma New Guinea. Th.e E.uTOpean
U~lion
has to increase financial aid to the ACPcountne~zn order to zncrease the trade value ofproducts from these countnes.A Tape crop in Zimbabwe.
